NEW DELHI: With rising costs — both fuel and employee — beating down margins and pushing India's airline industry into red, CEOs of airline companies will put their heads together on October 16 to devise efforts for wiping the blood off the tarmac.

The 11 Indian airline companies — Air India, Indian Airlines, Alliance Air, Jet Airways, Air Sahara, Kingfisher Airlines, Air Deccan, SpiceJet, GoAir, IndiGo and Paramount — have formed an association to join hands in combating rising costs. The association — which is yet to be christened — is headed by AI chairman V Thulasidas and will hold its first meeting on October 16 in Mumbai.

"Though no formal agenda has yet been fixed, the airline CEOs are expected to take up matters related to operational costs. All airlines are burdened by costs, both from rising fuel prices and high employee costs. They will try to come up with a solution to addressing this cost burden," an industry source told ToI.

Airlines will deliberate on issues like fuel surcharge. "There has been a thinking that all airlines must come together and charge a uniform fuel surcharge from air travellers. This matter is also expected to be taken up at the first meeting of the CEOs," the source added.

Also, the airlines will talk about joining hands and lending ground support to each other in case of any emergency. "For instance, if one airline is forced to cancel a flight for some reason, its passengers can be accommodated in a rival carrier. Also, if an aircraft is grounded at a station where the airline does not have a base, another carrier can help it out with spares and other ground support," the source said.

This arrangement is underway between select airlines, but the industry CEOs are seeking an across-the-board arrangement where any airline can help a rival carrier in case of an emergency. The association, sources said, was formed following a meeting with aviation minister Praful Patel where the minister urged the airlines to watch their botomlines and look at improving yields rather than forcing the industry into sickness withpredatory pricing.

"Though airlines are not expected to talk about ticket pricing as each one should be left to follow its own business plan, there is a consensus on greater cooperation to improve yields and cut down losses," the source said.

Incredible - one of the Directors of BA has just resigned because he tried to "discuss" fuel surcharges with Virgin Atlantic, and yet in India all the CEOs can get together publicly to discuss fuel surcharges!!

jordan191 wrote:Incredible - one of the Directors of BA has just resigned because he tried to "discuss" fuel surcharges with Virgin Atlantic, and yet in India all the CEOs can get together publicly to discuss fuel surcharges!!

There's a difference between trying "under the table price fixing" vs. forming a formal alliance that will do nothing in the end.

At least they can mutually agree to reduce the Cockpit crew's salary/benefits.....or at least put a cap. BTW, do airlines from India pay higher compensation to both Indian/Foreign crews compared to the international standard?

The October-16 meeting of the Indian carriers in Mumbai is expected to be a stormy one, with full service carriers and budget airlines likely to lock horns over issues like regulation of fares and putting up of stiff entry barriers.

It promises to be a repeat of the meeting of airlines called by Civil Aviation Minister Praful Patel on September 28, at which full-service airlines demanded government intervention in regulation of fares and entry barriers as a way out of the financial crisis being faced by the industry.

Airline sources said full service carriers would push for budget carriers agreeing to a base price, so that revenues and yields were protected.

“One of the main reasons for the financial condition of the airline industry is unreasonably low prices. It is in the overall interest of the airlines that there is agreement on at least a minimum price,” said an executive with a full-service carrier.

According to industry estimates, domestic carriers are together expected to make staggering losses of Rs 2,500 crore in the 2006-07 period.

However, G R Gopinath, managing director of budget airline Air Deccan, said: “We are against any sort of price regulation. Companies may go bankrupt, but why should the government regulate fares or airlines reach an agreement on fares? It’s unethical and against the interests of consumers.”

In order to ensure that a carrier’s financial health did not lead to bankruptcy, and to curtail predatory pricing by carriers, the government had proposed to review the business plans and financials of airlines every quarter and suggest corrective measures. The government said it was borrowing the model from the US.

At the same time, some other full-service carriers are of the view that pricing should be left to market forces. “Why should there be a discussion on fares? We are of the view that it should be left to the market to decide,” said M Thyagarajan, managing director of premium carrier Paramount Airlines.

Industry insiders said the meeting would also lay the framework for an association of Indian carriers on the lines of Nasscom or CII.

“There is no forum for airlines in the country to discuss issues and reach an agreement. The meeting will try and give shape to a formal association,” said a senior executive with an airline.

In addition, the meeting is expected to discuss areas like sharing of infrastructure, ground facilities and fleet. Besides, it will work out a common approach towards the proposed civil aviation policy.

Nimish, you're right - however I personally don't see any difference betwwen under the counter price fixing, and over the counter price fixing.

Malik, given most of the airlines are bleeding money currently, you can be sure any potential savings will be used to shore up the losses rather than reduce prices further. Some people are obsessed by load factors on aircraft, however if I charged 1 Rupee per seat I could fill the aircraft no problem, but lose a fortune! Air Deccan admitted as such recently, and I'm sure it applies to other carriers such as Spicejet.

PALatYWG, to answer your question: GENERALLY speaking, Indian crews are paid under international standard (if there is such a thing, given the huge variety of pay around the world), and Foreign crews get paid at international contract rates - if the Indian airlines don't pay these rates, the foreign crews will not come to India as they can go elsewhere. The higher international rates also put upward pressure on Indian crews salaries.

Ten scheduled commercial airlines and all freight carriers in the country today came together to float the Federation of Indian Airlines -- a common platform to lobby with the government on all civil aviation related matters.

The federation, which would soon get a director general and a registered office in the national capital, is being coordinated by flag carrier Air-India’s Chairman and Managing Director V Tulasidas.

He told reporters that all the members, including national carriers Air-India and Indian, would pay a membership fee of Rs 50 lakh.

The federation members would shortly meet Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Petroleum Minister Murli Deora and discuss issue of fuel cost, which has hit the margins of all airlines.

The federation has been floated at a time when even the government is contemplating having a regulator for the sector, which is booming in the wake of entry of new carriers, especially no-frills airlines.

In fact, budget carriers like Air Deccan has been lobbying for separate low cost airports for such airlines.

The Union Cabinet today decided to refer a proposal for creating an Airport Economic Regulatory Authority to a Group of Ministers.

NEW DELHI: The bitter battle between airline companies over hiking fares is far from over. India's 11 airline industry CEOs will get together again on November 16 to discuss a fare hike in an attempt to wipe some of the red ink on their balance sheets. And the discussion — to be held in Delhi — will be a stormy one.

The industry CEOs — under the aegis of Federation of Indian Airlines (FIA) — will also discuss appointment of a head-hunter who will be entrusted with the task of finding a professional secretary general for their association.

The move is aimed at giving the association a neutral, professional face and modelling it on the lines of other industry bodies like CII, Assocham and Ficci.

But a discussion on fares, sources say, is expected to take centre stage. "The industry is still divided over the issue of hiking fares to cover some of their losses. Though a discussion on fares is not part of the formal agenda, the matter will surely be taken up. While some of the full-service airlines want all players to come together and effect an across-the-board hike, others are against the idea saying fares should be left to individual airlines," a source says.

At the last meeting, low-cost carriers and Vijay Mallya had shot down a proposal by some full-service carriers to hike fuel surcharge on domestic air tickets.

The main item on the agenda for the next meeting, sources say, is the appointment of a head-hunting organisation to identify a secretary general for the association.

"The head-hunter will be given the mandate to find a neutral and professional candidate who can take up matters concerning the industry with government and other bodies," the source adds.

The Federation of Indian Airlines (FIA), the newly formed pressure group of domestic carriers, is planning a non-poaching agreement on licensed category technical staff and standardisation of salaries.

The FIA, which met for the second time here today, is believed to be working out the modalities of a non-poaching agreement on pilots, technicians, and engineers.

The body, formed last month, is also drafting guidelines for co-operation in sharing of human resources, ground handling, maintenance, and training.

When contacted, FIA Chairman and Air-India CMD Vasudevan Thulasidas declined to comment on the agreement, adding, “the airlines are in the process of identifying areas where technical know-how and human resources can be shared.”

He further added, “We will have one more round of meeting tomorrow (November 4) as representatives of Indian Airlines, IndiGo and Air Deccan could not attend today.”

The FIA was also identifying the problems being faced by the industry. “We have sought appointments with Ministry of Civil Aviation, Prime Minister’s Office, law ministry and Ministry of Finance to take up our issues,” he said.

Sources close to the development said the FIA would seriously look into standardisation of salaries to arrest poaching. Earlier, Air Deccan had accused Kingfisher Airlines of poaching on its trained staff, which, it said, had affected its operations.

“The sharing of surplus human resources can lead to operational efficiency and reduce costs. Some airlines have already started to share human and technical resources,” Thulasidas pointed out.

Vijay Mallya, chairman & managing director of Kingfisher Airlines, said, “Poaching is still there in the Indian aviation industry.”

GoAir Managing Director Jeh Wadia and President of Air Sahara Alok Sharma said the meeting had adopted a new logo for the FIA, denoting unity among airlines.

Sources said the association had decided to set up an executive committee and committees for technical, safety, airport, regulatory and financial issues.

It would adopt a structure on the lines of an international organisation like Airlines European Association.

BANGALORE: Aviation turbine fuel (ATF) prices have been slashed by around 16% over the past two months but it will be another month or two before the domestic carriers effect a corresponding cut in the fuel surcharge.

Airlines said on Thursday that they were still not in a position to pass on the impact of ATF prices to passengers as the current 16% cut doesn’t quite match the 35% rise since January this year.

“We computed the impact of the increase in ATF prices over the past one year, and we found that we still have to recover around 10-15% of the impact of the rise. Since January, the ATF prices have tumbled thrice — February (4%), October (8%) and November (8%). That is 20% downward revision of jet fuel prices,” said SpiceJet Ltd CEO and chairman Siddhanta Sharma.

Another reason airlines are shying away from fuel surcharge revision is because of pressure from investors (stakeholders).

Sharma says stakeholders are keeping a hawk on ATF prices. “They feel it is not yet time for a cut in it,” he says.

Go Air chief commercial officer Raj Halve said fuel surcharge, which is levied at Rs 750 per passengers by all airlines, would be reduced before the end of the fog season (January-end).

“Our fuel cost is still high due of congestions at the airports (resulting longer circling time in the air and higher fuel burn) and fog. We will evaluate the situation after the fog season,” Halve said.

Indian Airlines, Air Sahara, Kingfisher Airlines and Jet Airways executives also said that they would wait some more time and watch the emerging situation before taking a call on trimming the current fuel surcharge rate.

Over the last two months, oil companies have, on an average, reduced the ATF prices by Rs 5500-6000 per kilolitre across various states to keep it in line with drop in international crude prices. This month, they slashed it by around Rs 3,000 per kilolitre. The jet fuel prices are currently hovering around Rs 35,000-Rs 42500 per kilolitre.

Gurgaon, Dec 15: With flight schedules being disrupted due to fog, resulting in chaos at airports, private airlines have approached the Defence Ministry to open military airports around Delhi to the civilian aircrafts.

"Under the umbrella of federation of Indian Airlines we have asked the Defence Ministry to let us utilise defence airports in Agra and Gwalior during disruptions of flights in Delhi due to fog," SpiceJet chairman Siddhanta Sharma said here.

The logic is to lessen delays due to diversion of flights to other airports, which are far from Delhi, he added.

"As such the Agra defence airport is open to chartered aircrafts and we think it can also be opened to civilian airlines during fog season," he said.

He said FIA was likely to get a reply from the ministry before its next meeting in January.

Meanwhile, SpiceJet today announced that it had got the cat ii certification from the Directorate General of Civil Aviation (DGCA).

"We have trained all pilots on our own except the three who joined US from Jet Airways. With this we are now prepared to meet the challenges of fog disruptions and ensure punctuality and safety to passengers," SpiceJet executive VP (Flight Operations) JS Dhillon said.

The low cost carrier is aiming to be Cat III(A) compliant by June 2007.

Dhillon said while the carriers were preparing on their own to meet challenges due to fog, airports also needed to be upgraded in order to give minimum discomfort to passengers.